Category: Lessons

Historical and constant maturity pricing are two distinct methods of pricing financial instruments. Historical pricing relies on past actual market data to calculate the value of a security or derivatives contract, while constant maturity pricing uses theoretical models to determine value. The primary difference between the two methods is that historical prices reflect actual market […]

ELEMENTS OF AN OPTION PRICE An option price is composed of several elements: Intrinsic value: the amount by which an option is in-the-money, if at all. Time value: the value an option has due to the possibility of future price movements and the time remaining until expiration. Volatility: the uncertainty in the size and frequency […]